IMPORTANT QUESTIONS

6a (i) A company is producing an identical product in two factories. Following are the Ap/CO4
details in respect of both the factories:
Factory X Factory Y
Selling Price per unit Rs. 50 Rs. 50
Variable Cost per unit 40 35
Fixed Cost 2,00,000 3,00,000
Depreciation included in the above 40,000 30,000
Sales (units) 30,000 20,000
Production Capacity (units) 40,000 30,000

You are asked to determine:

(a) Break-Even Point (BEP) for each factory individually.
(b) Which factory is more profitable ?
(8 Marks)
(ii) Explain P/V Ratio, Margin of Safety and application of marginal costing in U/CO2
managerial decision making.
OR
6b Saurashtra Co. Ltd. wishes to arrange overdraft facilities with its bankers from
(i) the period August to October 2019 when it will be manufacturing mostly for
stock. Prepare a cash budget for the above period from the following data given
below:

Month Sales (Rs.) Purchases Wages(Rs.) Mfg.Exp. Office Selling

(Rs.) (Rs.) Exp.(Rs.) Exp. (Rs.)
June 1,80,000 1,24,800 12,000 3,000 2,000 2,000
July 1,92,000 1,44,000 14,000 4,000 1,000 4,000

August 1,08,000 2,43,000 11,000 3,000 1,500 2,000

September 1,74,000 2,46,000 12,000 4,500 2,000 5,000

October 1,26,000 2,68,000 15,000 5,000 2,500 4,000

November 1,40,000 2,80,000 17,000 5,500 3,000 4,500

December 1,60,000 3,00,000 18,000 6,000 3,000 5,000

Additional Information:
a) Cash on hand 1‐08‐2010 Rs.25,000.
(b) 50% of credit sales are realized in the month following the sale
and the remaining 50% in the second month following.
Creditors are paid in the month following the month of
purchase.
(c) Lag in payment of manufacturing expenses half month.
 (d) Lag in payment of other expenses one month.
Develop a Cash Budget from the available information. (8 Marks) Ap/CO4

(ii) Explain the concept of Marginal Costing and its application in Managerial Decision U/CO2
Making. (7 Marks)

7a(i) The expenses budgeted for production of 1,000 units in a factory are furnished
below:
Per Unit
Particulars
(Rs.)
Material Cost 700
Labour Cost 250
Variable overheads 200
Selling expenses (20% fixed) 130
Administrative expenses (Rs. 2,00,000) 200
Total Cost 1,480
Develop a budget for production of 600 units and 800 units assuming administrative
expenses are rigid for all level of production. (8 Marks)

Ap/CO4
A factory engaged in manufacturing plastic buckets is working at 40%
(ii) capacity andproduces 10,000 buckets per month.
The present cost break-up for one bucket is as under:
Materials - Rs.10
Labour - Rs.3
Overheads Rs.5 (60% fixed)
The selling price is Rs.20 per bucket. If it is desired to work the factory at 50%
capacity the selling price falls by 3%. At 90% capacity the selling price falls by
5%accompanied by a similar fall in the price of material.
Develop a flexible budget at 50% and 90% capacities. (7 Marks) Ap/CO5
OR
7b(i) Explain Zero based budget and discuss in detail about the process of preparation of
Zero-based budget.
(8 Marks) U/CO4
(ii) From the following figures develop the raw material purchase budget for January,
2017:
MATERIALS
A B C D E F
 Estimated Stock on Jan 1 16000 6000 24000 2000 14000 28000

Estimated Stock on Jan 31 20000 8000 28000 4000 16000 32000

Estimated Consumption 1,20,000 44,000 1,32,000 36,000 88,000 1,72,000

Standard Price per Unit 25 p 5p 15 p 10 p 20 p 30 p

Ap/CO5
(7 Marks)

8 Compulsory Question
Prepare a cost sheet for the period ended 31 March 2020
• Cost of raw material Rs. 200000
• Productive wages Rs. 150000
• Indirect labour Rs.10000
• Carriage inwards Rs.20000
• Other factory expenses Rs.25000
• Office expenses Rs.40000
• Legal expenses Rs.10000
• Expenses for testing the quality of goods Rs.5000
• General managers salary Rs.30000
• Selling expenses Rs.20000
Profit 20% on total cost.
(8 Marks) Ap/CO3

Classify various types of Cost based on by nature or elements, time, traceability,

changes in activity or volume, and functions.
Ap/CO3
(7 Marks)